Many crop industries such as the sugar industry are becoming highly competitive due to globalization of competition. Cost effectiveness of a crop industry such as the sugar industry, for example, can be enhanced by optimally utilizing resources in the production of sugar products and by-products in different proportions in response to economic dynamics in the marketplace.
Traditionally, a crop industry such as the sugar industry has focused on the main crop product such as sugar. In the past, this strategy was justified as the other by-products (bio-fuels such as ethanol, butanol, bio-diesel or green-diesel, energy in form of electricity, bagasse, and molasses) were of secondary importance economically. In today's global economy, however, the price of the main crop product such as sugar fluctuates significantly as it is governed by global supply and demand. Also, because of the desire to decrease dependency on fossil fuels and because of an increased concern about global warming, the focus on and incentives for the production of bio-fuels have increased. The volatile prices of crude oil and electric power result in commensurate volatility in the price of bio-fuels. In addition, electric power generation using renewable sources (such as bagasse) fetches carbon credit revenues. For the sake of simplicity, the sugar industry will be considered as an example case of a crop industry.
The sugar industry has traditionally produced sugar from sugarcane juice. However, during the production of sugar, other major by-products such as molasses (the residual mass at the end of the crystallization stage) and bagasse (the fibrous residual after extraction of juices from sugarcane) are also produced. As indicated above, these by-products have traditionally been of less economical importance than sugar because of their low prices and demand.
Some sugar mills have converted molasses into bio-fuels by a fermentation process, and have converted bagasse into electricity using a co-generation method. However, because of low return on investment, the further conversion of by-products such as molasses and bagasse into sellable products like bio-fuels and electricity was not lucrative as many nations were mainly using crude oil (obtained by either domestic production or import) for their energy needs.
In today's global economy, where crude oil prices are threatening to become unaffordable, many countries are putting their efforts into developing energy self reliance as a part of their energy security strategies. Moreover, because of increased concern about global warming and stricter emission norms, both developed and developing countries are moving toward the adoption of environmentally friendly fuels. Hence, there is an increased demand for bio-fuels (fuel produced biologically) and green energy. Due to these changed circumstances, bio-fuel production and electricity generation offer additional sources of income to the sugar industry.
Sugar mills in today's changing world now have multiple economic routes for their resources. These mills can either divert the primary and/or secondary juice(s) to bio-fuel manufacturing by fermentation or they can use either or both juices for sugar production. Molasses can be either sold as animal feed and fertilizer or fermented to produce bio-fuels. Even bagasse can be burnt to produce electricity or sold as a raw material for the paper industry or fermented to produce bio-fuels. It should be noted that production of electricity is also possible from the spent wash generated during fermentation to produce bio-fuels such as ethanol. Moreover, the electricity generated using bagasse and spent wash is considered as green energy and earns carbon credits on excess energy (the energy above the internal needs of the sugar mill).
All of these economic alternatives require different time scales and processing costs and energies. In addition, government policies and regulations potentially affect the production levels of each of these end products.
Therefore, an agile decision support framework is needed. This framework should guide a crop industry such as the sugar industry to properly (i) evaluate these trade-offs under various what-if scenarios, and (ii) make optimal decisions related to the key intermediate resources, products, and by-products. Such a decision support system would help a crop industry such as a sugar mill to consistently drive its operations toward the optimization of profits and/or products and/or costs.